Archive for the 'Prophecy' Category

Kaleidic moments

Published
by
Peter
on 27/10/2008
in Prophecy, Uncertainty and economics
. 0 Comments

Is the economy like a pendulum, gradually oscillating around a fixed point until it reaches a static equilibrium?  This metaphor, borrowed from Newtonian physics, still dominates mainstream economic thinking and discussion.  Not all economists have agreed, not least because the mechanistic Newtonian viewpoint seems to allow no place for new information to arrive or for changes in subjective responses.   The 20th-century economists George Shackle and Ludwig Lachmann, for example, argued that a much more realistic metaphor for the modern economy is a kaleidoscope.  The economy is a “kaleidic society, interspersing its moments or intervals of order, assurance and beauty with sudden disintegration and a cascade into a new pattern.” (Shackle 1972, p.76).    

The arrival of new information, or changes in the perceptions and actions of marketplace participants, or changes in their subjective beliefs and intentions, are the events which trigger these sudden disruptions and discontinuous realignments.   Recent events in the financial markets show we are in a kaleidic moment right now.  If there’s an invisible hand, it’s not holding a pendulum but busy shaking the kaleidoscope.  

Reference:

Geoge L S Shackle [1972]: Epistemics and Economics.  Cambridge, UK:  Cambridge University Press.

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Perceptions and counter-perceptions

Published
by
Peter
on 22/10/2008
in Decision theory, Intelligence and Prophecy
. 1 Comment

The recent death of Yuri Nosenko allows me to continue an intelligence arc in these posts.  What is the connection to marketing, I hear you cry!  Well, marketing is about the organized creation and management of perceptions, which could also be a definition of secret intelligence activities.  In any case, the two disciplines have many overlaps, including some coincident goals and some similar methods, which I intend to explore on this blog.

First, let us focus on Nosenko.   He presented himself in Geneva in 1961 to CIA as an agent of KGB willing to spy for the Americans, and then defected to the USA in 1964.  Among other infornation, he came bearing a firm denial that the USSR had had anything to do with the assassination of John F. Kennedy in November 1963.   JFK’s alleged assassin, Lee Harvey Oswald, was, after all, one of the very few (perhaps under 1000) people who had defected from the USA to the USSR between 1945 and 1963, and one of the even fewer (perhaps under 50) people who had defected back again.  Nosenko claimed to have read Oswald’s KGB file.

From the start, lots of doubts arose regarding Nosenko’s testimony.   He did not seem to know his way around KGB headquarters, his testimony contradicted other information which CIA knew, there were  internal inconsistences in his story, and he cast serious aspersions on an earlier defector from KGB to CIA, claiming him to be a KGB plant.   Was Nosenko, then, a KGB plant or was he the genuine defector?   Within CIA the battle waged throughout the 1960s, with first the sceptics of Nosenko and then subsequently the believers in his bona fides holding sway.  Chief among the sceptics was James J. Angleton, who came to see conspiracies everywhere, and who was eventually fired from CIA for his paranoia.   (Robert De Niro’s film “The Good Shepherd” is based on the life of Angleton, with Matt Damon taking this part, and features a character based on Nosenko.)  Finally, CIA decided officially to believe Nosenko, and he was placed in a protection programme.  He was even asked to give lectures to new CIA recruits on the practices of KGB, such was his apparent acceptance by the organization. 

This final position so angered one of the protagonists, Tennent Bagley, that, 40 years later, he has written a book arguing the case for Nosenko being a KGB plant who duped CIA.   The book is very compelling, and I find myself very much inclined to the sceptic case.   However, one last mirror is missing from Bagley’s hall.   What if the top-most levels of CIA really did doubt that Nosenko was genuine?    Would it not be better for CIA to not let KGB know this?  In other words, if your enemy tries to dupe you, and you realise that it what they are trying to do, is it not generally better to let them think they have succeeded, if you can?    Certainly, more information (about their methods and plans, about their agents, about their knowledge) may potentially be gained from them if you manage to convince them that they have indeed duped you.  All you lose is - perhaps - some pride. 

Moreover, in this case, the dupe arrives bearing a message about the JFK assassination.   For many and various reasons (not all of them necessarily conspiratorial), CIA may have been keen to accept the proposition that KGB were not involved in JFK’s assassination.   How do you convince KGB that you believe this particular message if you don’t believe the messenger is genuine?   So, also for pragmatic reasons, the top levels of CIA may have decided to act in a way which would lead (they hoped) to KGB thinking that their ruse had worked.

How then to convince KGB that their plant, Nosenko, was believed by CIA to be for real?  Simply accepting him as such would be too obvious — even KGB would know that his story had holes and would not believe that a quick acceptance by CIA was genuine.   Better, rather, for CIA to argue internally, at length and in detail, back-and-forth-and-forth-and-back, about the question, and then, finally, in great pain and after much disruption, decide to believe in the defector.   Bagley either does not understand this last mirror (something I sincerely doubt, since his book evidences a fine mind and very keen understanding of perception management), or else perhaps his book is itself part of a plan to convince KGB that Nosenko was fully believed by CIA.  

 

References:

Tennent H. Bagley [2007]: Spy Wars: Moles, Mysteries, and Deadly Games.  New Haven, CT: Yale University Press.

Robert De Niro, Director [2006]:  The Good Shepherd. Universal Pictures.

Tim Weiner [ 2007]:  Legacy of Ashes: The History of the CIA.  Doubelday.

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The post-modern corporation

Published
by
Peter
on 09/03/2008
in Forecasting, Planning, Prophecy and market planning
. 0 Comments

red-arrows.jpg Anyone who has done any strategic planning or written a business case knows that planning requires one to forecast the future.  If you want to assess the financial viability of some new product or company, you need to make an estimate of the likely revenues of the company, and this requires making a prognosis of the level and nature of demand for whatever it is the company plans to provide.   “Taking a view on the future” is what the M&A people call this.

The problem is that the future is uncertain and different people may have different views of it.   There are usually many possible views one could take, and stakeholders are not always able to agree on which is the most likely.  Financial planners typically deal with this uncertainty by developing a small number of scenarios:  often called a best case,  an average case, and a worst case.    These scenarios are very rarely ever the actual “best” or the actual “worst” that the planners could conceive.  More typically, they are the best or worst ”plausible” cases.  Similarly, the middle case may not be average in any sense of the word, but simply a case the planners happen to favour that is somewhere between the best and worst.   Often the average case is the best the planners think they can get away with, and they contrast this with an outlandish upside and a still-profitable downside.   As with other human utterances (eg, speeches and published papers), effective business planners take into account the views of their likely audience(s) when preparing a business plan.   

For telecommunications companies operating in a regulated environment, there is a further wrinkle:  the fifth “P” of telecoms marketing, Permission.  To gain regulatory approval or an operating licence for a new service, telcos in many countries need to make a business case to the regulatory agency.  Here, the regulators may have their own  views of the future.  Quite often, governments and regulators, especially those in less developed countries, feel they are behind in technology and believe that their country has a vast, untapped market ready for the taking.   Sometimes, governments have public policy or even party-political reasons for promoting a certain technology, and they want the benefits to be realized as quickly as possible.   For these and other reasons, governments and regulators often have much more optimistic views of likely demand than do the companies on the ground.

Thus, we have the situation where a company may prepare different business plans for different stakeholders, each plan encoding a different view of the future:  an optimistic plan for the regulator, a parsimonious plan for a distribution partner and yet another for internal use.   Indeed, there may be different views of the future and thus different plans for different internal audiences also, for reasons I will explain in my next post.   Living with uncertainty, the post-modern corporation treats its view of the future as completely malleable — something which can be constructed and re-constructed as often as occasion or audience demands.

In my next post, I’ll talk about the challenges of planning with multiple views of the future, and give some examples.

Reference:  This post was inspired by Grant McCracken’s recent post on Assumption-Hunting.  

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